As Australian homeowners brace for economic shifts, many are asking: is now the right time to fix their mortgage rate? The answer isn’t straightforward, as the Reserve Bank of Australia (RBA) is expected to make pivotal decisions in early 2025 that could shape the market.
Why Fixed Rates Are in Focus Recently, banks like Macquarie and others have cut their fixed mortgage rates, making these options more competitive. This move is largely in anticipation of a possible rate cut by the RBA, which may start as early as February 2025
Fixed rates currently offer a chance for borrowers to lock in certainty amid economic uncertainties, especially for those who have faced rising repayment costs over the past two years.
The Variable Rate Gamble For those betting on the RBA cutting rates next year, variable mortgages remain attractive. However, the gap between variable and fixed rates has been shrinking, reducing the immediate advantage of choosing a variable option. If the RBA delays rate cuts, borrowers with variable rates may continue to face higher monthly repayments.
Rising Mortgage Arrears and Financial Pressure Adding to the complexity, mortgage arrears have been on the rise in 2024, with more homeowners struggling to keep up with repayments as living costs and debt serviceability pressures grow. In this context, fixed-rate loans may provide some much-needed stability for households that prioritize predictability over potential rate reductions.
Should You Fix or Stay Variable? The decision ultimately depends on individual financial situations. Borrowers who value stability and can afford current rates might benefit from fixing now, locking in rates before the market shifts. On the other hand, those who can manage short-term volatility might prefer to hold out for potential rate cuts in 2025, riding the wave of variable rates.
With the RBA’s upcoming moves still uncertain, this is a critical moment for homeowners to assess their mortgage strategies and align them with their financial goals.
Get in touch with us if you have any queries or uncertainty about your current financial status.
